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Canada’s unemployment rate rises in disappointing July

The Canadian economy’s job creation came to an abrupt end in July, suffering the first major reversal in almost a year with the shedding of 30,400 jobs, pushing up the national unemployment rate up by one-tenth of a point to 7.3 per cent.

A home under construction in Oakville Unemployment rose in July, but residential construction is still strong.(July 23, 2012) (Richard Buchan / THE CANADIAN PRESS)

By Vanessa LuBusiness Reporter

Fri., Aug. 10, 2012

After several months of modest job gains, Canada lost a surprising 30,000 jobs in July, raising concerns about a stalling recovery.

“It’s definitely a disappointment,” said Douglas Porter, BMO’s deputy chief economist, of the 30,000 losses. “It was quite broadly based, and it didn’t seem to be due to any statistical glitches. It was spread across a number of industries. It hit five different provinces, fortunately not Ontario.”

Still the Statistics Canada jobs report had a few bright spots, including the addition of more full-time jobs, higher wages and an increase to total hours worked.

Porter cautions about reading too much into a one-month period, noting that even in the strongest years, there can be one or two months of decline in jobs.

“What I find a bit more troubling is we have only seen very modest job growth over the last 12 months and the unemployment rate has not improved at all from a year ago.

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“To me, that’s a little bit more telling than any one month-to-month move,” Porter said, adding he is concerned that August numbers might show a decline too.

The national unemployment rate rose by one-tenth of a point to 7.3 per cent in July.

Ontario, which added 20,000 jobs in June, saw little change in July. The unemployment rate rose to 7.9 per cent, up 0.2 percentage points, as more people searched for work.

Most of the job losses in July were in Quebec, which shed 28,700 jobs. Those statistics are sure to be front and centre as Quebecers head to the polls on Sept. 4.

Job losses were also concentrated among women aged 55 and older, while employment was virtually unchanged among the other major demographic groups.

Losses were in wholesale and retail trade, professional, scientific and technical services, and public administration. That was offset by gains in finance, insurance, real estate and leasing, as well as information, culture and recreation.

The report’s brighter news includes 21,300 net, new full-time jobs in July, offsetting the loss of 51,600 part-time jobs. Average wages also rose, up 3.6 per cent from a year ago. Total hours worked increased 1.2 per cent.

The Bank of Canada is not scheduled to review interest rates until Sept. 5, but BMO’s Porter doesn’t believe there will be an immediate changes.

Earlier this week, Bank of Canada governor Mark Carney made it clear that there is little chance of any interest rate cut; rather he has hinted of a hike to cool the housing market.

“This type of (job) news would suggest they will bide their time quite a bit longer,” Porter said. “With employment struggling, there is no rush whatsoever for the Bank of Canada to be raising interest rates.

“In other words, the Bank of Canada is standing on the sidelines, waiting for the rest of the world to start to improve before they raise interest rates,” he said.

The U.S. jobs report for July, released last week, showed an increase of 163,000 jobs. U.S. job growth for the past 12 months has been stronger than in Canada.

Porter said the U.S. economy is growing faster, but they were starting from a much weaker point. Their unemployment rate remains a full percentage point above Canada’s.

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